Auto Loan Calculator
Trade-in, sales tax, real monthly.

How This Calculator Works

The auto loan calculator runs three layers of math. First, it nets your trade-in against the price to determine the taxable basis. Then it applies your local sales-tax percentage to that basis, adds dealer/DMV fees, subtracts your cash down, and arrives at the amount financed. Finally it amortizes that financed amount at your rate over your term using the standard fixed-rate formula.

Trade-In and Sales Tax

In most US states, the dealer subtracts your trade-in value from the price before calculating sales tax. On a $38,000 vehicle with a $10,000 trade-in at 6.5% sales tax, you save 6.5% × $10,000 = $650 in tax. That's why selling your old car privately for slightly more than the trade-in offer often nets out the same — the tax savings on a trade-in are real money. States that tax the full purchase price regardless: California, Hawaii, Maryland, Michigan, Virginia, and a handful of others.

The Upside-Down Trap

If LTV at signing is over 100%, you're upside down the moment you drive off the lot. New cars depreciate 15–25% in the first year, so a 90% LTV today becomes 110% in 12 months. If you total the car, gap insurance covers the difference — only if you bought it. If you want to sell or refinance, you'll owe the difference out of pocket. The fix: 10%+ down on new, 20%+ on used, and never roll negative equity from a previous loan into a new one.

How Long Should the Term Be?

Industry data shows 39% of new auto loans now stretch 72 months or longer. The math is awful. A $35,000 loan at 8% over 36 months: $1,096/mo, $4,500 total interest. The same loan over 72 months: $613/mo, $9,150 total interest. You pay twice the interest for the privilege of a lower monthly. The only legitimate reason to go beyond 60 months is if the longer term is the difference between getting reliable transportation and not — and even then, refinance the moment your credit or rates improve.

New vs. Used vs. Lease

• New: Best warranty, worst depreciation. The financial hit of years 1 and 2 is roughly 30% of the purchase price.
• 2–3 year used: The financial sweet spot. Someone else absorbed the depreciation cliff. Certified pre-owned often comes with extended warranty.
• Lease: Lower monthly, but you own nothing at the end. Makes sense if you write off the payment as a business expense or genuinely want a new car every 3 years.

Frequently Asked Questions